Research Objective: This study explores the impact of environmental, social, and governance (ESG) factors on the firm value of service firms in Nigeria during the period from 2013 to 2022. Specifically, it investigates the effect of corporate social responsibility (CSR) expenses, staff compensation, and directors' remuneration on the net assets of these firms.
Methodology: The research utilised secondary data extracted from the annual reports and financial statements of seven service firms listed on the Nigerian Exchange Group during the specified period. Multiple regression analysis was employed to analyse the data.
Findings: The results indicate that:
Corporate Social Responsibility Expenses: The effect on net assets is positive but statistically non-significant (CSRE: p-value: 0.6205 > 0.05, Coeff = 5.744009).
Staff Compensation: The effect on net assets is positive and statistically significant (STFC: p-value: 0.0006 < 0.05, Coeff: 2.945618).
Directors’ Remuneration: The effect on net assets is positive but statistically non-significant (DITR: p-value: 0.7641 > 0.05, Coeff: 1.962013).
These findings suggest that increases in any of the ESG variables generally lead to an increase in firm value, although the significance of the impact varies.
Conclusion: The study concludes that while corporate social responsibility and directors' remuneration positively influence firm value, the impact is not statistically significant. In contrast, staff compensation has a significant positive effect on firm value.
Recommendations: Enhance CSR Programs: Firms should improve their firm value by implementing robust CSR initiatives such as infrastructural development, skill acquisition programs, and scholarships for indigent students in their host communities.
Increase Staff Compensation: Firms should regularly review and enhance staff salaries, wages, and welfare packages (including recreational facilities, meal subsidies, medical, and transport allowances) to create value.
Adequate Directors' Remuneration: Adequate remuneration for directors is recommended to attract competent individuals capable of formulating sound policies and providing effective oversight.